Competition & Copyright – Battles & Balance

October 2nd 2014

In its draft report released last week, the Competition Policy Review Panel wants to chip away at the rights of copyright owners.

The panel advocates doing so to promote what it sees as a larger social good – competition and consumer interest. It’s the latest in an ongoing battle that ultimately seeks to redistribute wealth from copyright owners and creators to distributors and consumers.

It’s a heated field, with a wide range of legitimately differing views – take the Financial Review’s article that has Profs. Allan Fels and Henry Ergas, two prominent regulatory economists, suggesting that piracy plays a positive role in reducing prices to consumers. They suggest that efforts to reduce piracy should be approached cautiously. While advocated in the context of a cost-benefit analysis, its prominent position in the media makes it abrasive and divisive. On its own, it’s a dangerous policy argument if given any serious weight. Could one sensibly suggest shoplifting be rationalised or advocated to keep retail prices of soft drinks down?

For copyright owners there are a couple of key proposed changes:

• Repealing import restrictions: unless copyright interests can show that restricting imports is in the public interest and that their objectives can only be achieved by “restricting competition”, import restrictions would be lifted. Booksellers, for example, would be free to source legitimately produced books from anywhere in the world for re-sale in Australia. Book publishers have generally resisted calls to repeal the provisions because unrestricted imports would make investment in Australian content increasingly unviable.

• Removing the exemption for intellectual property licensing in section 53(1) of the Consumer and Competition Act 2010. This is a provision, amongst a range of others, that exempts copyright licence agreements from being considered anti-competitive. For copyright owners, this is a potentially helpful provision that can reduce the complexity of digital distribution arrangements.

• That an overarching review into intellectual property be undertaken by a body such as the Productivity Commission, focussing on competition issues arising from new developments in technology and markets and what principles and processes the Government should follow when incorporating intellectual property provisions into international treaties. While sound in principle, it would run a serious risk of being costly and ineffective. Has the market failed that badly to warrant that level of administrative oversight?

It is perhaps telling that the draft Report classifies intellectual property – including copyright – as a “regulatory restriction”. No doubt such a view would be surprising to many copyright owners, who view copyright not as a “restraint”, but as an asset that underwrites their investment. Instead, intellectual property laws – in the draft words of the Panel – “limit the ability of consumers to exercise choice and the ability of producers to respond to consumers”. But this is nothing new – they are features of most property laws. Land ownership isn’t often complained of as a “regulatory restriction” though its owner can largely choose who may enjoy it – it is more often seen as an accepted cornerstone of our society. They are features of the law’s attempts to balance competing interests. One person’s restriction is another’s incentive.

Intellectual property has always been about balance –balancing the public interest – providing incentives and rewards to creators and the public interest in having access to material at a reasonable price. The balance is important – its position shapes the distribution of wealth and access and the incentives to create.

As the Panel finalises its report, your voice in the debate is important helping to strike that balance properly.

Responses to the draft report should be submitted on or by 17 November 2014. The Panel is expected to finalise and submit its report to government by the end of March 2015.

If you would like to discuss how the issues raised in the draft report might affect you and your business, contact copyright lawyer Adam Simpson or Ian McDonald (Special Counsel) at Simpsons Solicitors.